Someone please explain buying off plan as i have reserved!

[joan_brown]

Hi as a first time buyer having seen a show home and plans i have put a reservation fee down at a persimmon development. However, i have no idea how the process works, the consultant on site was as useful as a cardboard cut out. I asked about the process and she just read out of a masterfile she has given me. My home isnt ready until may 2008 (8 months) . Can someone please explain the process. The consultant basically said i have 28 days to exchange and pay 10% (which means?). But then said a mortgage offer only lasts 6 months and searchs 3 months. And i had to have that all complete before i exchange and she didnt know if they would run out. And my completion date is not fixed it could change by months and i will know when i can move in unitl after a CML? (what is a CML) they will then "serve notice"? and i have 7 days to complete. Is this right i will only know 7 days before i will actually move in? and what about my mortgage offer and searches expiring? one very confused first time buyer.

Joan

[brian]

Whoah - okay, let me get this straight - you put down a deposit on a house and effectively entered into some form of contract, even though you have no idea what that contract may basically involve, let along the buying process itself??

[joan_brown]

well if you put it like i suppose your correct. However, i saw the plans and same house type and read the spec and was informed when it would approx. be ready to move into. It was all the buying terminology that confused me and after the conversation with the sales consultant i was totally lost. ( I presumed she would tell me about the whole process after i had reserved)

[Crumpet28]

Hi Joan,

I would go back to who you dealt with and get them to explain everything to you very clearly. Who is the housebuilder?

I say this as I did a similar thing over 18 months ago. To cut a long story the property still isn't finshed and isn't going to be finshed for another year (actually, I still haven't got a completion date). This is a major housebuilder in the UK market and I am now currently stuck in a big legal battle.

I'm not trying to scare you off, but if I had known all the facts before exchanging contracts, there is no way whatsoever that I would have got in this situation. I blame my situation on the sales consultant.

Drop me a mail if I can be of further help.

Cheers,

Crumpet

[Mansel]

Hi. I have bought off plan before and this is how it went. You do have to exchange in 28 days, this means that you are contractually bound to purchase the property when it is finished. You also have to pay a deposit of between 5 and 10% depending on the developer. You cannot have a mortgage in place as the offer will run out before the development is complete so you are taking a risk in buying the property and not knowing if you will be able to get a mortage when the time comes. On the other hand you can sometimes buy property at todays prices in the future using this method if the house prices go up.

[Richard Webster]

On the other hand you can sometimes buy property at todays prices in the future using this method if the house prices go up.

They could go down - or the builder will be offering various discounts and other perks in a few months time. Did you check the price against the price of similar 5-10 year old houses in the vicinity? In 10 years time few people will pay significantly more for a 10 year old house than a similar 20 year old one. A property is more likely to hold its value if there isn't anything at all similar nearby other than houses on this particular estate.

You should get your solicitor to explain the paperwork that you have signed, but I would be wary of buying off plan now because you get caught paying more than you need to.

As a conveyancing solicitor I believe the information given in the post to be useful but I accept no liability except to fee-paying clients